Session I 16 February 2017 Ann-Louise Hittle - IEF · 16 February 2017 Ann-Louise Hittle ......

IEF- KAPSARC Roundtable

Session I

16 February 2017

Ann-Louise Hittle

Trusted commercial intelligencewww.woodmac.com

Trusted commercial intelligence© Wood Mackenzie

2

Onshore OPEC

Other L48 Tight Oil

Wolfcamp Eagle Ford

Onshore Non-OPEC

Mid-Continent SCOOP/STACK

Vertical

Shallow Water OPEC

Bone Spring

Deepwater Brazil

Bakken

Deepwater Non-OPEC

Niobrara

Shallow Water Europe

Canada Oil Sands Deepwater Angola

Deepwater US

Deepwater Nigeria

0

20

40

60

80

100

120

0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 11000 12000

Bre

kev

en

US

$/b

bl

Bre

nt

eq

uiv

ale

nt

Liquids production 2026 (million b/d)

Deepwater US

Canada Oil Sands

Shallow Water Europe

Deepwater Non-OPEC

Weighted average based on production in 2026

Source: Wood Mackenzie onshore breakevens at 10% discount rate, offshore at 15%.

Shallow Water Non-OPEC

DeepwaterShallow waterOnshoreLower 48 Tight OilWeighted average breakeven based on 2026 production

0 1 2 3 4 5 6 7 8 9 10 11 12

Pre-FID and US L48 future drilling cumulative production by breakeven in 2025 – by resource theme

Competitors repositioning at the low end of the oil cost curve

US tight oil, Brazil and low cost Middle East opportunities in demand

$60/bbl

Source: Wood Mackenzie onshore breakevens at 10% discount rate, offshore at 15%


3

30%

35%

40%

45%

50%

55%

60%

65%

70%

2016 2018 2020 2022 2024 2026 2028 2030

% G

as

Pro

du

cti

on

BP ex. Russia Chevron

Eni ExxonMobil

Shell Statoil

Total

70

80

90

100

110

120

130

2016 2018 2020 2022 2024 2026 2028 2030

Ind

ex

ed

Pro

du

cti

on

BP Chevron

Eni ExxonMobil

Shell Statoil

Total

Oil majors’ growth to fall late next decade; Gas is a big differentiator

Some competitors starting to address the long-term sustainability challenge

Majors’ WM base case production indexed to 2016 Evolution of % gas in the production mix

Source: Wood Mackenzie CBT Q4 2016


4

In low oil price environment since late 2014, the ‘hopper’ of conventional pre-FID developments has diminished

Production from pre-FID conventional projects Change in production outlook since 2014

-4.5

-4.0

-3.5

-3.0

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

Yr1 Yr3 Yr5 Yr7 Yr9 Yr11

Pro

du

cti

on

ch

an

ge,

'millio

n b

/d

Other

UAE

Kazakhstan

Congo

United States

Libya

Russian Fed.

Brazil

Norway

Nigeria

Angola

Source: Wood Mackenzie

0

1

2

3

4

5

6

7

8

9

10

Yr1 Yr3 Yr5 Yr7 Yr9 Yr11

Pro

du

cti

on

, m

illio

n b

/d

2014 Pre-FID projects

Q3 2016 Pre-FID projects


Production volumes from 2014 and 2016 datasets rebased to same start year for comparison purposes


5

Global oil demand: growth focused on transport and petchem

Global oil demand by sector Oil intensity (bbl per $1000 GDP in 2010 prices)

Oil intensity (amount of demand per unit of GDP) declines in all regions


6

US Lower 48: declines have now bottomed out and production is expected to respond strongly to recent higher oil prices

But how fast will operators move to ramp up activity and can production growth be sustained in the long term?

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

202

0

202

1

202

2

202

3

202

4

202

5

202

6

202

7

202

8

202

9

203

0

203

1

203

2

203

3

203

4

203

5

Pro

du

ctio

n '0

00

b/d

NGLs Other tight oil

STACK SCOOP

Niobrara Bone Spring

Wolfcamp Eagle Ford

Bakken Conventional



7

70

75

80

85

90

95

100

105

110

2015 2020 2025 2030 2035

Mil

lio

n b

/d

YTF

Other discoveries

Reserves growth

Commercial

*Yet-to-find (YTF) production forecasts in the oil supply view are based on past success ratesand include volumes from Frontier basins. Excludes Unconventionals (Biofuels, gas-to-liquids (GTL) & coal-to-liquid (CTL))

Over 10% of global liquid supply by 2035 will be sourced from conventional volumes that are yet to be discovered

Africa, Latin America and North America account for around 60% of those volumes

0

2

4

6

8

10

12

2015 2020 2025 2030 2035

Mil

lio

n b

/d

Russia and the Caspian

Oceania

North America

Middle East

Latin America and theCaribbeanEurope

Asia

Africa

Global liquids capacity outlook Yet-to-find* capacity outlook by region

Source: Wood Mackenzie’s Oil Supply Tool. Note, Macro Oils and Oil Supply Tool use the same analysis


8

COP21 world and low oil prices both pushing majors to focus on low cost production raising risk of supply shortfall by 2035

� Post 2020, oil demand growth slows although continues to 2035 despite inroads by EVs and declines in oil intensity

� US tight oil drives non-OPEC growth; Permian Basin is the focus and current prices are high enough for operators

� Project-FIDs for conventionals declined in low oil price world of 2014-2016

� Incentive is against exploration but our 2035 supply outlook includes 10% from conventional volumes yet to be discovered

� If US tight oil does not deliver, there is risk for price spike due to low OPEC spare capacity and limited other non-OPEC investment.


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Disclaimer

� This report has been prepared for IEF-KAPSARC by Wood Mackenzie Limited. The report is intended solely for the benefit of IEF-KAPSARC and its contents and

conclusions are confidential and may not be disclosed to any other persons or

companies without Wood Mackenzie’s prior written permission.

� The information upon which this report is based has either been supplied to us by IEF-

KAPSARC or comes from our own experience, knowledge and databases. The opinions expressed in this report are those of Wood Mackenzie. They have been

arrived at following careful consideration and enquiry but we do not guarantee their

fairness, completeness or accuracy. The opinions, as of this date, are subject to

change. We do not accept any liability for your reliance upon them.

Strictly Private & Confidential


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Session I 16 February 2017 Ann-Louise Hittle - IEF · 16 February 2017 Ann-Louise Hittle ......

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Transcript of Session I 16 February 2017 Ann-Louise Hittle - IEF · 16 February 2017 Ann-Louise Hittle ......